How Disney Parks and Resorts Use the Ps in Marketing

While most businesses have suffered from the economic downturn, Disney has managed to sustain their position as a global leader in parks and resorts, even increasing their revenue by $5 billion in the last 4 years. The question is, how are they accomplishing this, and what are they doing differently from their competitors. 

When we look at the financial statements of Disney's Amusement Park Competitions, we see a very dramatic difference. Knott's Berry Farm, or Cedar Fair LP, recorded a loss in net income of $85 million in 2011. Six Flag's Magic Mountain is another Park in the Southern California region that recorded a loss of $102 million in 2011.

A strong marketing strategy is what separates the top companies from the ones that are struggling to survive within the industry. To briefly understand how to distinguish the two, we will look at the 2 of the 5P’s in marketing: positioning, and pricing.

Establishing Strong Positioning
Positioning could arguably be the most important out of the 5P's in the marketing strategy. Positioning is essentially what consumers think of a certain brand.  As quoted from Philip Kotler, positioning is “…the act of designing the company’s offer and image so that it occupies a distinct and valued place in the target customer’s minds.” In order to position a brand, there are 4 things that should be considered:

            1) Target Market - who is the target consumers?
            2) Nature of Competition/Category – what is it that you are selling?
            3) Points-of-Parity – how are you similar to your competitors?
            4) Points-of-Difference – how are you different from your competitors?

When we look into Disneyland’s positioning, we can see that they are extremely successful in occupying a space in the target consumer’s mind. Disney is the epitome of family entertainment – the brand is valued by children and adults alike. Disneyland Parks and Resorts is selling an experience – a destination that has been dubbed the “happiest place on earth.” If we get down to the main core, Disney is essentially selling happiness, and going to their amusement parks is a way to get it. Achieving happiness can be considered a universal desire, and resonates with a wider audience. The memories that are created, and feelings associated with their visits is what makes Disneyland able to encourage repeat visits.

In contrast, Six Flags and Knott's Berry Farm have not been able to create a strong positioning, which is clearly reflected in their current financial status. Without doing any research, can you recall Six Flag and Knott's slogan? Even though I had been to Six Flags and Knott's many times, I still had trouble remembering. Six Flag has the slogan "More Flags, More Fun," and Knott's Berry Farm's "American's 1st Theme Park." The fact that I had to search for their slogan suggests that they do not occupy a distinct place in the consumer's mind, or have a strong enough positioning.

Pricing
Pricing can become a tricky business. The goal is to find the perfect balance between what consumers can afford, and how much they are willing to pay for an admission ticket. The most common pricing strategies are:

            - Value Pricing                                                - Hi, Low Pricing
            - Everyday Low Pricing                                  - Premium Pricing
            - MAPP Pricing                                              - Luxury Pricing

Unlike everyday low pricing (which offers low prices consistently), premium pricing marks up the price consistently, to the highest possible range that will still attract consumers, and stopping before the point where the target audience feel like it is unattainable.

In the past few years, the admission fee to Disneyland has increased annually. Right now, a 1 Day, 1 Park ticket is $80 for adults, and the 1 Day Park Hopper is $105. For Knott's and Six Flags, their tickets are in the $40-50 range. However, Six Flag frequently offers discounts (bringing Coke cans to get 50% off), and Knott's discounts can often be found at supermarkets. Unlike some of its competitors, Disney rarely gives discounts on single ticket purchases. The common perception is that when the price is being lowered, the quality is also affected.

Key Takeaways 
The rule of thumb to successful marketing is to have the P's be consistent with one another. A clear connection can be made between Disneyland's positioning and pricing. By maintaining their premium pricing strategy, Disney is able to remain “the best” in the consumer’s mind. However, we must keep in mind that it is because of how strongly establish the Disney brand is in the consumer’s mind that allows them to successful charge their admission fees at a premium price. How these two intertwine so naturally is indicative of how successful and strong the Disney brand is.

Marketing Techniques You Should Know About

In today’s fast paced environment, it’s becoming increasingly hard for marketers to capture the attention of their target consumers through commercial advertising. When you think about your own personal habits, do you really sit through television commercials? Something I have mastered over time is flipping to another channel, and timing it perfectly so that when I go back to my original channel, the show is just coming back on. For students, reading another few pages of assigned reading is another alternative to sitting through commercials. For professors, it might mean grading a few more papers. For Facebook users, commercials can be a cue for checking your news feed, or updating your own status.

Change in Consumer Trends
In 1948, the highest rated show, Texaco Star Theater, was watched by 87% of TV households. In 1964, 41% of households tuned in to watch Beverly Hillbillies, which was the highest rated show then. In 2000, the highest rated show, Who Wants to be a Millionaire, was only watched by 11% of households. It has also been recorded that the percentage of people who skip commercials during live TV viewing is around 45%. The decline in the percentage of people’s attention on TV commercials is undeniable. Traditional ways of advertising may not be the most effective way to reach consumers.

There is an increase in the number of alternate activities we can engage in on a daily basis. The decrease of exposure to television commercials meant that people were reallocating their time doing other activities. In addition, the invention of TiVo also made it easier for people who did watch TV to skip through commercials (72%). Because of this, marketers are forced to come up with more inventive ways to capture their target consumer’s attention. So the question is, how are marketers exposing consumers to their products? Today I will discuss two forms of marketing techniques: product placement and merchandising.

Product Placement
Product Placement is a form of advertising that exposes consumers to certain products and brands without making a commercial or print ad; it is meant to be subtle and embedded in something else (most often in movies, TV shows, or events). One of the first successful product placements in movies was Steven’s Spielberg’s E.T (The Extra-Terrestrial) in 1982. The movie’s partnership with Hershey appears to blend in with the movie plot seamlessly. Elliott, the character in the movie who befriends E.T, uses Reese’s Pieces to coax him initially. A quick clip of the movie can be seen here. After E.T.’s inclusion of Reese’s Pieces, sales for the candy increased by 65%.

A more recent example is the ever-popular Twilight movies, where the male lead played by Robert Pattinson sports the Volvo C30. In subsequent films, we can see newer, and different models of the car being driven by Edward Cullen. The important question to ask is whether or not product placement is still effective. According to Volvo representatives, sales have spiked as a result of their partnership with the Twilight Brand.
 
Some movies even base their storyline around a certain brand. In 2004, the comedy Harold & Kumar Go to White Castle came out in theaters. The whole premise of the movie is about two friends trying to satisfy their craving for White Castle burgers. Another example is The Italian Job, where a group of thieves pull of a heist using three Mini Coopers. They key is to have consumers notice the product without being told that it is there.

Product placement doesn’t just appear in the movie screen; it is also becoming increasingly popular in TV shows.  More recently, shows are getting more brands to sponsor them. An example of this is American Idol, with AT&T and Coca-Cola. E.T’s product placement is one of the earliest examples of product placement. Although product placement is not a new phenomenon (we can trace product placement from the beginning of film making) it is still an effective advertising technique that is widely used today.

Merchandising 
Merchandising, in a nutshell, is where products are placed within a store. Believe it or not, many studies have been done to figure out what locations certain products should be placed within a store. The most widely used example is the layout of a grocery store. 

Have you ever wondered why the milk and eggs are always located at the back of a grocery store? There is very simple logic behind it all. Milk and eggs are staple items in a household. Even if you don't intend to purchase anything else, you still have to walk all the way to the back, and pass by other products that may entice you to make an unplanned purchase.

When manufacturers fight for shelf space, they usually want the most coveted (and consequently most expensive) position: just slightly below eye level of the average adult. Marketers have observed that when shoppers walk by an aisle, their attention is usually focused on places they can easily make eye contact with. The amount of space a brand occupies also plays a big role. Having less presence within a shelf filled with products can cause shoppers to overlook a certain brand without realizing it's there. A lot of thought process goes into where certain products should be placed. Different products require different shelf space. For instance, products that are meant to attract kids are usually placed at a lower shelf space, so they can ask mom and dad to buy that colorful cereal box that caught their eye.

Another technique practiced by grocery stores takes advantage of the fact that the majority of people are right-handed. Because of this, high margin items are usually placed on the right side of the aisle, and store brands are usually placed on the right-hand side of name brands. 

Best Practices
The most effective way to market a brand is to mix and match different techniques (there are many other techniques I did not mention). While it is easier for consumers to disregard TV commercials, it doesn't mean commercials are no longer profitable. Superbowl commercial slots are still being fought over for a premium price year after year. However, as consumer trends change, marketers can no longer rely on a single form of advertising to reach their target consumers. The trick is to recognize where the target consumers spend most of their time, and use that knowledge to your advantage.

The Power of Perception

In the marketing world, perception is synonymous with reality. Perception is a process we use to interpret the many stimuli we come across on a daily basis, and how we view the world around us. What we have to remember is that what we perceive to be real, in fact, may not be what is “true.” Marketers use this to their advantage, because how customers perceive the things around them is ultimately what affects their actions.

It is the marketer’s job to capture their consumer’s attention through exposure to their brand and products. How consumers come to formulate their own opinions about a certain brand becomes their perception about a product. Whether or not a certain brand is necessarily better than another brand that offers the same product is still up for debate. There will never be a right answer, because it is all subjective. To prove my point, I will give you some examples.

Perception and Optical Illusions
The one thing we all know and love about optical illusions is that the image we see is tricking us to believe a certain way. The funny thing is, even after we learn the truth about a certain image, how we perceive it still remains the same.

Take a look at the picture to your right. As you look at this checkerboard, do you notice a difference between the square labeled A, and the square labeled B? You would probably say that square A is a darker shade of gray, and square B is a lighter shade. What would you say to me if I told you that square A and square B are the exact same shade of gray? You probably wouldn’t believe me, but it is true (check yourself by cropping out the two different squares and compare them together).

Below are some more optical illusions for your viewing pleasure. When you look at Figure 1, do you see gray dots in between the squares? In truth, the gray dots don’t exist. In Figure 2, our perception is that the line above is somehow shorter than the line below. In truth, they are the same length. In Figure 3, we perceive the lines as slanted, when in truth, they are all perfectly straight.

    Fig 1.                                             Fig. 2                                                  Fig 3.

     

Blind Taste Tests
Perception is a powerful tool marketers use to influence consumers about their feelings towards a certain product. One extremely well known example is the Pepsi and Coke debate. Does Coke necessarily taste better than Pepsi, or any other cola alternative? As I mentioned before, positioning is the “act of framing the company’s image and offer in the target consumer’s minds, so it occupies a distinct and valued place in relation to competitors.” Although Coke might be considered to die-hard Coca-Cola fans as better than Pepsi, how do they fare when it comes to blind taste tests? 

Just a few a weeks ago, I witnessed a Coke vs. Pepsi vs. RC Cola experiment in one of my business classes. Seven die-hard Coca-Cola fans volunteered, and swore they would be able to tell the different between Coke and Pepsi in a heartbeat. As they stepped out of the room briefly, my professor set up the experiment. Each volunteer was given three small Dixie cups of cola. However, the three different sample sips didn’t necessarily contain three different beverages. For example, someone was given two Pepsi and one Coke, or two RC Colas and one Pepsi, or even all Cokes, etc.; the mix was random. Nevertheless, the main goal remained the same: to identify whether or not they were experiencing the Coca-Cola taste.

After the taste test, a chart was made on the blackboard, and each volunteer had to assign a brand to each Dixie cup they were given. To make things more interesting, they also had to choose which cup contained their favorite beverage. Naturally, the one they thought was Coke was also the one they assigned as their favorite.

The results were quite interesting. Only one die-hard Coke fan correctly identified the Dixie cup that contained Coke.  A number of them had named RC Cola as their favorite cola, while the rest of the volunteers were shocked to find that they had named Pepsi, their rival, as their favorite beverage of choice. When asked whether or not they would make the switch to Pepsi or RC Cola, all of them seemed to be disgusted by the idea. Like the optical illusions above, even though we are given the truth, our perceptions are so strong it is what drives us to believe what we want to believe (that Coke is still the best).

While this was a fun and informal experiment we did in class, there are still a number of studies that back up the same conclusion: how we respond to a certain product relies largely on the brand associations we assign in our minds. Consequently, our perception of the brand is an incredibly important factor. In 2004, Baylor College of Medicine conducted a research on Coke vs. Pepsi using functional Magnetic Resonance Imaging (fMRI). The fMRI machine was able to monitor each test subject’s brain activity and how they respond to the information they were given. In their study, volunteers were exposed to image cues of either a flash of light, a picture of a Coke can, or a Pepsi can before taking a sip of either Coke or Pepsi. They found that when subjects were given Coke as their brand identification, their taste preference changed, as well as their brain activity. The Coke brand image activated areas of the brain that indicated the modification of behavior based on emotions.

Recognizing the Importance of Perception
What does this ultimately tell us? Coca-Cola does a fantastic job in their marketing because they understand that in order to win the hearts of consumers, you must connect with them, and have them perceive your brand the way you want them to perceive it. Throughout the years, they have maintained a very consistent message that has allowed them to have consumers with such a strong brand loyalty. Their success is their mastery of creating positive perceptions around their brand.

My intent is not to claim that marketers are manipulating us to believe a certain way. After all, everyone has their own opinions -- one person's favorite could be another person's least favorite. It is, however, being able to recognize that humans have a natural tendency to assign an emotional connection with certain brands. Once they come into contact with a stimulus, their brain automatically forms their own opinions about it. Understanding the importance of perception is crucial, because what customers perceive is, ultimately, what drives their decisions and actions. Many companies have failed because they did not recognize the power of perception. Offering a superior product may not be enough to be profitable and sustainable in today’s market. Although their product might be better in quality, if it is not perceived that way, it won't make a difference.The key is getting your primary target to believe that your product is better. Remember, our perception is what we construct to be our reality.